When a relative dies, how does the IRS even know about undeclared assets to charge inheritance taxes for?

Question

My question refers to antiques, artwork, and jewelry (loose stones) that may or may not have significant value. My mother owns a lot of Asian art that may total in value anywhere from $10,000 total to potentially $300,000, but, not having been appraised, nobody knows at this point. When my father was alive, he loved to just collect art and jewelry from his travels, not as an investment, but just as someone who loved to collect things. When my Mom passes away, is there any need for me to "declare" anything...or even inform the IRS about any of this artwork? Some would suggest a Trust, but frankly, nobody has time or energy to have this art appraised, etc. now. I don't even see this as necessary because it seems like I could simply 'take possession' of this completely undeclared/unvalued artwork. Is there a flaw in my thinking? What are some risks or recommendations? I guess I am not aware of where the IRS's "radar" lies with assets such as these undeclared, unappraised items.

Answer 1

The executor of the will has to file a final tax return for the deceased.

If you are not the executor that person would have to be in collusion with you to hide those assets (so there goes a conspiracy as well as tax fraud for that executor.)

If you are the executor you have to file that last tax form. If anyone (former dealer who sold some, disgruntled former employee, nosy neighbor) has original info they can inform the IRS about those assets. They get a cut (20% I think) of the tax that is owed and you get some major jail time.

Answer 2

1) Take the time and energy to have the art appraised. If it's worth between $10,000 and $300,000, I'm sure you'd rather know what it's worth now before your mum's house burns down and you try to make the insurance claim. Revise your mother's insurance accordingly. DO NOT accept any offers to buy from dealers!

2) The IRS relies on the executor to get the amount right. If the executor does a poor job, it is he who is responsible for any back tax due on the estate, not the people who get the money. It behooves him or her to get it right the first time.

3) It belongs to your mother. You have no right to take possession of it either now or after she's deceased, unless she specifically grants it to you. If she gives you pieces (now, while she's alive) with a value in excess of $12,000, she has to file a gift tax return.

4) If it is sold while she is still living, someone's going to have to dig up the purchase price of all these items. The capital gains tax (whether she sells it or she gifts it to you) is the difference between the purchase price and the sale price. Have a look through your father's papers and see if there are still records somewhere. If it's sold after she's passed on, the capital gain is computed using a basis of the value at the time of her death.

5) Take the time to learn about the Asian art, the antiques, and other valuables in your mother's house. This will prevent an unscrupulous antiques dealer from ripping you off when it comes time to sell. Sell via auction only. Auctioneers interests are aligned with yours: If it sells for more, both you and they get paid more. If you sell to a dealer, it is in his or her best interest to buy it from you for less than it's worth. If you must sell via a dealer, at least go for a commission based price system to align his interests with yours.

6) I researched all my mother's artwork and antiques; my mother has a statuette worth $150,000 now for which she paid just $1500 (I have the receipt!) in the 1960's. This will pay for in-home 24 hour nursing care instead of having to put her in some lousy nursing home.

Answer 3

the sole way that the IRS will cancel the tax is that in case you could tutor which you have been bancrupt on the 2d that the debt replaced into canceled. you're bancrupt the two in case you have filed financial ruin or if the fee of all your sources is decrease than the completed quantities of money which you owe to all lenders. the fee of working up the financial statements to tutor that in case you're no longer acquainted with producing a stability sheet may well be greater desirable than what you owe. My gut tells me that that may no longer the case right here, so your in basic terms out is to pay the tax. element of that's overdue fee outcomes and the IRS will often waive those upon request in case you haven't any longer been penalized interior the previous few years or in case you have a compelling clarification for paying overdue. The tax and the interest could be paid. so far as to what the internal maximum loan employer did, seek for advice from with an criminal expert. i will guess that they did no longer have a modern-day mailing address for you and which you made no attempt to maintain the counseled of your address. The time to contest the project replaced into whilst it got here approximately and that i will guess that they nevertheless have the unopened qualified mail sent on your previous address and decrease back as undeliverable. FWIW, the $3,000 that they have got been given replaced into in all probability at public public sale and represented the expert wholesale fee of the vehicle at that factor. no longer that that's any of my employer, yet why did you no longer in basic terms shop the vehicle? there isn't any regulation that asserts you won't be in a position to take a financed automobile out of state once you progression -- i've got performed it countless circumstances.

Answer 4

When someone dies, the executor of the estate typically does an inventory of the assets, assigning values to them. The assets are divided by the wishes of the will. Once this information makes it into the court, bingo, the IRS can find it.

The executor has the job of settling with the IRS. If they don't, the IRS will not be nice to them.

Answer 5

You also have to worry about when you sell this. If the amount of cash is large enough, that has to be reported to the IRS. On audit, the IRS might be interested in where you got the artwork.

Answer 6

You are making no taxable income on the acquisition of these items. It is simply a transfer of assets from one holder to another. When you sell any of these items Report the sale on Form 1040, Schedule D, Capital Gain and Losses. If you sell the property for more than your basis(http://www.irs.gov/publications/p551/index.html), you have a taxable gain. Once again, until you sell this property, there is no tax liability on the inheritance of this property.

Answer 7

Currently there is a 2 million exemption on estate and gift tax of 1 million each. So if the net worth of the estate is less then that amount then dont worry about it.